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Dairibord FY 2012 financial results
 

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Dairibord FY 2012 financial results

Dairibord FY 2012 financial results

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Dairibord FY 2012 financial results Document Transcript

  • 1. HIGHLIGHTS 2012 2011 % US$ US$ Increase Financial Revenue 106 888 635 95 983 037 11% Operating profit 9 800 079 10 846 038 -10% Profit for the year 7 162 870 7 074 116 1% Net cashflows from operating activities 5 341 509 6 046 411 -12% Net assets 49 515 576 43 574 385 14% Volume Litres Litres Raw milk Intake 26 974 246 25 988 331 4% Sales 71 477 527 65 194 440 10% Closing market price (US cents) 21.00 19.00 11% Market capitalisation (US$) 75 117 180 67 671 961 11% Net asset value per share (US cents) 13.84 12.24 13% ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2012 Non- Capital Retained controlling Total reserves earnings interests equity US$ US$ US$ US$ As at 1 January 2011 24,232,672 10,586,528 1,182,918 36,002,118 Profit for the year - 6,932,861 141,255 7,074,116 Other comprehensive loss (175,315) - (80,994) (256,309) Exercise of share options 749,105 - - 749,105 Share-based payment transactions 208,839 - - 208,839 Dividends paid - - (86,589) (86,589) Purchase of interest from minorities 117,784 - (234,679) (116,895) As at 31 December 2011 25,133,085 17,519,389 921,911 43,574,385 Profit for the year - 7,076,933 85,937 7,162,870 Other comprehensive income / (loss) 473,339 - (254,798) 218,541 Dividends paid - (1,567,812) (18,608) (1,586,420) Issue of share capital 146,200 - - 146,200 As at 31 December 2012 25,752,624 23,028,510 734,442 49,515,576 ABRIDGED GROUP STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2012 2012 2011 US$ US$ Assets Non-current assets Property, plant and equipment 40 877 522 36 335 816 Investment in an associate - 247 909 Intangible assets 793 882 833 970 Other non-current financial assets 1 313 021 994 374 42 984 425 38 412 069 Current assets Inventories 14 791 523 11 854 387 Prepayments 3 277 293 2 615 248 Trade and other receivables 10 417 703 8 777 463 Cash and cash equivalents 2 069 529 2 254 549 30 556 048 25 501 647 Assets classified as held for sale 256 305 611 038 30 812 353 26 112 685 Total assets 73 796 778 64 524 754 Equity and liabilities Equity Capital reserves 25 752 624 25 133 085 Retained earnings 23 028 510 17 519 389 Equity attributable to owners of the parent 48 781 134 42 652 474 Non controlling interest 734 442 921 911 Total equity 49 515 576 43 574 385 Non-current liabilities Interest - bearing borrowings 2 988 196 1 391 854 Deferred tax liability 4 381 462 4 265 852 7 369 658 5 657 706 Current liabilities Trade and other payables 12 182 051 9 816 214 Interest - bearing borrowings 4 033 759 4 337 245 Income tax payable 695 734 1 125 801 16 911 544 15 279 260 Liabilities directly associated with assets classified as held for sale - 13 403 16 911 544 15 292 663 Total liabilities 24 281 202 20 950 369 Total equity and liabilities 73 796 778 64 524 754 ABRIDGED GROUP STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2012 2012 2011 US$ US$ Revenue 106 888 635 95 983 037 Operating profit 9 800 079 10 846 038 Finance costs (560 728) (507 326) Finance income 181 867 140 954 Share of loss of associate - (512 362) Profit before tax 9 421 218 9 967 304 Income tax expense (2 233 817) (2 780 290) Profit for the year from continuing operations 7 187 401 7 187 014 Loss after tax for the year from discontinued operations (24 531) (112 898) Profit for the year 7 162 870 7 074 116 Other comprehensive income: Other comprehensive income / (loss) for the year, net of tax 218 541 (256 309) Total comprehensive income for the year 7 381 411 6 817 807 Profit attributable to: Owners of the parent 7 076 933 6 932 861 Non - controlling interest 85 937 141 255 7 162 870 7 074 116 Total comprehensive income attributable to: Owners of the parent 7 550 272 6 757 545 Non - controlling interests (168 861) 60 262 7 381 411 6 817 807 Earnings per share (cents) Basic 1.98 1.97 Diluted 1.98 1.96 Number of shares in issue 357 700 858 355 980 858 Weighted average number of shares 356 819 007 351 896 108 Weighted average number of shares adjusted for the effect of dilution 357 218 325 353 409 731 ABRIDGED GROUP STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2012 2012 2011 US$ US$ OPERATING ACTIVITIES: Profit before tax from continuing operations 9 421 218 9 967 304 Loss before tax from discontinued operations (24 531) (111 226) 9 396 687 9 856 078 Non-cash items 3 419 990 4 487 009 Working capital adjustments (4 300 425) (5 718 180) Finance costs (560 728) (507 340) Income tax paid (2 614 015) (2 071 156) Net cashflows from operating activities 5 341 509 6 046 411 Investing activities: Acquisition of property, plant and equipment (6 425 795) (5 771 412) Acquisition of intangibles (52 179) (509 473) Purchase of additional interest in subsidiary - (116 895) Increase in other non-current financial assets (318 647) (602 338) Proceeds from sale of associate 200 000 - Proceeds from sale of investments 35 999 - Dividends received 1 708 - Proceeds from sale of property, plant and equipment 564 315 287 946 Finance income 181 867 140 954 Net cash flows used in investing activities (5 812 732) (6 571 218) Financing activities: Net increase in borrowings 1 585 537 406 808 Proceeds from exercise of share options 146 200 749 105 Dividends paid (1 586 420) (86 589) Net cashflows from financing activities 145 317 1 069 324 Net (decrease) / increase in cash and cash equivalents (325 906) 544 517 Effects of exchange rate changes 139 411 33 601 Cash and cash equivalents at 1 January 2 256 024 1 677 906 Cash and cash equivalents at 31 December 2 069 529 2 256 024 SUPPLEMENTARY INFORMATION 2012 2011 US$ US$ Depreciation charge 2,263,133 2,509,883 Capital expenditure 6,477,974 6,280,885 Capital commitments 10,114,751 10,260,450 - Authorised and contracted for 951,289 1,599,702 - Authorised but not contracted for 9,163,462 8,660,748 NOTES TO THE FINANCIAL STATEMENTS Basis of preparation The Group’s financial statements were prepared in accordance with International Financial Reporting Standards (IFRS) and are based on statutory records that are maintained under the historical cost convention except for property and financial instruments stated at fair value. The financial results are presented in United States dollars (US$). Significant accounting policies The accounting policies adopted are consistent with those of the previous financial year. Amendments to IFRS that became effective in the current year did not have an impact on the financial results of the Group. Contingent liabilities The Group is a respondent in various employee claims for unfair dismissals. The total estimated liability is US$441 792. On the basis of legal advice, the claims are not valid and there will be no outflow of resources. Approval of Financial statements The underlying financial statements to these results were approved by the Board on 5 March 2013. Audit opinion The Group auditors, Ernst & Young have issued an unqualified opinion on the consolidated financial results of the Group. The signed audit opinion is available for inspection at the registered office of Dairibord Holdings Limited at ZB Life Towers, 9th Floor, 77 Jason Moyo Avenue, Harare, Zimbabwe. CHAIRMAN’S STATEMENT REVIEW OF THE OPERATING ENVIRONMENT ZIMBABWE The 2013 National Budget provided evidence of a general deceleration of economic growth for 2012, with GDP growth estimated at 4.4%, down from an original forecast of 9.6%. Inflation closed the year at 2.9%. The subdued economic growth reflects the effects of a cocktail of challenges facing the economy. Business activity during the period under review was affected by the following factors:- • Liquidity challenges • The high cost and erratic supply of utilities mainly, water and electricity • Increasing costs of key raw materials • Intense competition from imports MALAWI The business environment in Malawi continues to be a challenge. Foreign currency shortages persist, in the absence of tangible economic stimuli and donor support. The Malawi Kwacha (MK) was devalued by more than 100% during the year, and closed the year at MK342: US$1. The devaluation fuelled inflation which closed the year at 35% up from 9.8% at the beginning of the year. PERFORMANCE Despite the decline in economic growth, sales volumes for the year increased by 10% over 2011 driven by a 21% growth in foods, 10% in beverages and by a 4% rise in liquid milk. The strong growth in foods and beverages was due to improved product supply following the investments in yoghurt, ice cream and beverages, carried out between 2010 and 2011. Growth in liquid milk was subdued due to stunted growth in raw milk supply. Revenue from continuing operations for the period ended 31 December 2012, increased by 11% to $107 million. Revenue from foods increased by 22%, beverages by 11% and liquid milks by 2%. No consumer price adjustments were effected during the year to maintain market competitiveness. While consumer prices remained constant, operating costs recorded significant increases, putting pressure on margins. Major cost increases were in labour, utilities, fuel and materials, which depressed the operating profit and margins for the year. An operating profit of $9.8 million was achieved compared to $10.8 million achieved in 2011, while the profit for the year, at $7.1 million was the same as that posted in 2011. Although the profit contribution of the subsidiary in Malawi remained positive, operating profit at Dairibord Malawi decreased by 41% to $0.484 million, on account of the currency devaluation. The operating profit margin shed off two percentage points from 11%, to 9%, and the profit after tax margin was at 7% in the two years. The Group continues to generate positive operating cash flows. Net cash flows generated from operations for the year were $5.3 million. Borrowings increased by $1.3 million to $7 million, in support of the 2012 capital expenditure of $6.5 million. RAW MILK SUPPLY Raw milk volumes grew by 4%, to 27 million litres. In Zimbabwe, milk intake volumes increased by 8%, benefiting from the Group’s milk supply development initiatives. In Malawi raw milk supplies decreased by 10%, as farmers were affected by prolonged power cuts, leading to milk spoilage. Farmers have now been assisted with the purchase of generators to reduce the negative impact of power cuts. The Group expects improved raw milk supply volumes in 2013 as the heifer importation program in Zimbabwe begins to yield results. The first batch of 250 in-calf heifers was received in October 2012, and distributed to selected contract farmers. An additional 1 million litres per annum is expected from this batch. INVESTMENTS The Group disposed the 40% equity in M.E Charhons for $1 million to Cairns Holdings Limited who exercised their rights in terms of the shareholders agreement. As at end of the year, $0.2 million had been received. No profit or loss was realised from the disposal. Cairns was placed under judicial management at the end of November 2012 and directors consider the full recovery of the balance as doubtful. The decision to dispose of Mulanje Peak Foods was made by the Board in 2011. A sale and purchase agreement was signed after the reporting date and is under implementation. No loss is expected to be realised from this disposal. SUSTAINABILITY PERFORMANCE The Group is committed to operate in a manner that is socially, economically and environmentally responsible. In support of this commitment, the Group adopted the Global Reporting Initiatives (GRI)’s Sustainability Reporting Framework as a guidance tool for measuring and reporting its sustainability impact and contribution to sustainable development. As such, the Group’s Annual Report for the year 2012 includes sustainability performance and disclosures which meet the requirements of Application Level C of GRI’s Sustainability Reporting Guidelines. The Board and Management remain committed to ensuring that all business operations are aligned with the international standards which guide sustainable business practices covering environmental, economic, social and governance issues. OUTLOOK The Zimbabwe economy is still expected to grow, albeit at a slower pace. The multicurrency system and low inflation are expected to continue supporting economic stability. In Malawi, growth will be constrained by the limited availability of foreign currency. Dairibord Malawi will focus on driving exports to sustain viability. The Group’s performance will be supported by the investments carried out in 2012, in yoghurt and condiments, and further investments targeted for 2013. Management will continue to focus on volume growth and revenue enhancement through brand building and support. Capital expenditure for 2013 is projected at $10 million. This is targeted at improving production capacity and distribution efficiencies. To stream line operations and to reduce costs, the Group is implementing plant and staff rationalisations to be completed within the first half of 2013. The installed infrastructure especially of the milk processing plants is not aligned to the current reduced processing volumes, and hence the need to rationalize operations. The exercise will result in reduced costs, and will ensure sustainability of operations. DIRECTORATE Mr Timothy Chiganze retired from the Board on 28 June 2012, having served the company for 14 years, 7 of them as Chairman. On behalf of the Board I take this opportunity to once again thank him for his devoted and dedicated service to the company and wish him the very best in his future endeavours. DIVIDEND The directors have declared a dividend of 0.45 US cents per share. The dividend is payable on or around 10 May 2013 to shareholders registered in the books of the company at the close of business on 3 May 2013. APPRECIATION I express my gratitude to our business partners, the farmers, customers, fellow Board members, the management team, staff and all stakeholders for their contribution and unstinting devotion to the Group throughout the year. Dr. L L Tsumba Chairman 5 March 2013 Directors: Dr L. L Tsumba (Chairman), *A. S. Mandiwanza (Group Chief Executive), S. P. Bango, S. Chindove, *T. Mabika, C. Mahembe, H. Makuwa, F Mungoni, *M. R. Ndoro, J. Sachikonye * Executive